Question

On April 1, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company's first month. April 1 Nozomi invested $43.000 cash and computer equipment worth $40,000 in the company 2 The company rented furnished office space by paying $2,600 cash for the first month's (April) rent 3 The company purchased $1,100 of office supplies for cash. 10 The company paid $2.700 cash for the premium on a 12-month insurance policy. Coverage begins on April 11 14 The company paid $1.500 cash for two weeks' salaries eamed by employees 24 The company collected $10,000 cash for commissions eamed. 28 The company paid $1.500 cash for two weeks' salaries eamed by employees 29 The company paid $300 cash for minor repairs to the company's computer 30 The company paid $1,400 cash for this month's telephone bill. 30 Nozomi withdrew $2,300 cash from the company for personal use. The company's chart of accounts follows: 101 Cash 106 Accounts Receivable 124 Office Supplies 128 Prepaid Insurance 167 Computer Equipment 168 Accumulated Depreciation-Computer Equip 209 Salaries Payable 301 J. Nozomi, Capital 302 J. Nozomi, Withdrawals 405 Commissions Earned 612 Depreciation Expense Computer Equip 622 Salaries Expense 637 Insurance Expense 640 Rent Expense 650 Office Supplies Expense 684 Repairs Expense 688 Telephone Expense 901 Income Summary Use the following information: a. Prepaid insurance of $150 has expired this month. b. At the end of the month, $800 of office supplies are still available. c. This month's depreciation on the computer equipment is $500. d. Employees eamed $370 of unpaid and unrecorded salaries as of month-end. e. The company earned $1,750 of commissions that are not yet billed at month-end. Required: 1. & 2. Prepare journal entries to record the transactions for April and post them to the ledger accounts in Requirement 6b. The company records prepaid and unearned items in balance sheet accounts. 3. Using account balances from Requirement 6b, prepare an unadjusted trial balance as of April 30. 4. Journalize the adjusting entries for the month and prepare the adjusted trial balance. 5a. Prepare the income statement for the month of April 30. 5b. Prepare the statement of owner's equity for the month of April 30. 5c. Prepare the balance sheet at April 30. 6a. Prepare journal entries to close the temporary accounts and then post to Requirement 6b. 6b. Post the journal entries to the ledger. 7. Prepare a post-closing trial balance.

Answer 1

Prepare journal entries as follows:

Date	Account Titles	Debit	Credit
April. 01	Cash	$43,000
	Computer Equipment	$40,000
	J. Nozomi, capital		$83,000
April. 02	Rent Expense	$2,600
	Cash		$2,600
April. 03	Office Supplies	$1,100
	Cash		$1,100
April. 10	Prepaid Insurance	$2,700
	Cash		$2,700
April. 14	Salaries Expense	$1,500
	Cash		$1,500
April. 24	Cash	$10,000
	Commission Earned		$10,000
April. 28	Salaries Expense	$1,500
	Cash		$1,500
April. 29	Repair Expense	$300
	Cash		$300
April. 30	Telephone Expense	$1,400
	Cash		$1,400
April. 30	J. Nozomi, withdrawal	$2,300
	Cash		$2,300

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Ledger posting as follows:

Date April. 01 Computer Equipment Debit Credit Balance $40,000 $40,000 Date April. 01 April. 02 April. 03 April. 10 April . 14 April. 24 April. 28 April. 29 April. 30 April 30 Cash Debit Credit Balance $43,000 $43,000 $2,600 $40,400 $1,100 $39,300 $2,700 $36,600 $1,500 $35.100 $10.000 $45.100 $1,500 $43,600 $300 $43,300 $1,400 $41,900 $2,300 $39.600 Date April. 01 J. Nozomi, capital Debit Credit Balance $83,000 $83,000 Date Rent Expense Debit Credit $2,600 Balance $2.600 April. 02 Office Supplies Debit Credit $1.100 Date April. 10 Prepaid Insurance Debit Credit $2,700 Balance $2,700 Date April. 03 Balance $1.100

Date Date April 14 April. 28 Salaries Expense Debit Credit $1,500 $1,500 Balance $1,500 $3,000 Commission Earned Debit Credit Balance $10,000 $10,000 April. 24 Repair Expense Debit Credit $300 Date April. 30 Telephone Expense Debit Credit $1,400 Balance $1,400 Date April. 29 Balance $300 Date J. Nozomi, withdrawal Debit Credit $2,300 Balance $2,300 April 30

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Prepare unadjusted trial balance:

Credit Unadjusted Trial Balance Debit $39,600 $2,700 $1,100 $40,000 $83,000 $2,300 Cash Prepaid Insurance Office Supplies Computer Equipment J. Nozomi, capital J. Nozomi, withdrawal Commission Earned Salaries Expense Rent Expense Repair Expense Telephone Expense Total $10.000 $3,000 $2,600 $300 $1,400 $93,000 $93,000

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Prepare adjusted entries as follows:

Trn.	Account Titles	Debit	Credit
a)	Insurance Expense	$150
	Prepaid Insurance		$150
b)	Office Supplies Expense	$300
	Office Supplies [$1100 - $800]		$300
c)	Depreciation Expense	$500
	Accumulated depreciation-computer equipment		$500
d)	Salaries Expense	$370
	Salaries payable		$370
e)	Accounts Receivable	$1,750
	Commission Earned		$1,750

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Ledger posting as follows:

Date a) Insurance Expense Debit Credit $150 Balance $150 Date April. 10 a) Prepaid Insurance Debit Credit Balance $2,700 $2.700 $150 $2,550 Date b) Office Supplies Expense Debit Credit Balance $300 $300 Date April. 03 b) Office Supplies Debit Credit Balance $1,100 $1,100 $300 $800 Date C) Depreciation Expense Debit Credit $500 Balance $500 Date c) Accumulated depreciation-eqip. Debit Credit Balance $500 $500 Date April. 14 April. 28 d) Salaries Expense Debit Credit $1,500 $1,500 $370 Balance $1,500 $3,000 $3,370 Date d) Salaries payable Debit Credit Balance $370 $370

Date e) Accounts Receivable Debit Credit $1,750 Balance $1,750 Date April. 24 e) Commission Earned Debit Credit Balance $10,000 $10,000 $1,750 $11,750

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prepareadjusted trial balance:

Adjusted Trial Balance Debit Cash Prepaid Insurance Office Supplies Accounts Receivable Computer Equipment Accumulated deprn.-Equip. Salaries payable J. Nozomi capital J. Nozomi, withdrawal Commission Earned Salaries Expense Rent Expense Repair Expense Telephone Expense Depreciation Expense Office Supplies Expense Insurance Expense Total Credit $39,600 $2,550 $800 $1.750 $40,000 $500 $370 $83,000 $2,300 $11.750 $3,370 $2,600 $300 $1,400 $500 $300 $150 $95,620 $95.620

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Prepare financial statements as follows:

Income Statement $11.750 Commission Earned Less: Expense Salaries Expense Rent Expense Repair Expense Telephone Expense Depreciation Expense Office Supplies Expense Insurance Expense $3,370 $2.600 $300 $1,400 $500 $300 $150 $8,620 Net Income $3,130 Statement of owners' equity Beg Bal Add: Net Income Less: Withdrawals End. Bal. $83,000 $3.130 ($2,300) $83,830

Balance Sheet Assets: Cash Prepaid Insurance Office Supplies Accounts Receivable Computer Equipment Accumulated deprn.-Equip. Total Assets $39,600 $2.550 $800 $1,750 $40,000 ($500) $39,500 $84,200 Liabilities: Salaries payable $370 Owners' Equity $83,830 Total Liabilities and Owners' equity $84,200

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Prepare closing entries as follows:

Date	Account Titles	Debit	Credit
April. 30	Commission Earned	$11,750
	Income Summary		$11,750
April. 30	Income Summary	$8,620
	Salaries Expense		$3,370
	Rent Expense		$2,600
	Repair Expense		$300
	Telephone Expense		$1,400
	Depreciation Expense		$500
	Office Supplies Expense		$300
	Insurance Expense		$150
April. 30	Income Summary
	J. Nozomi, capital [$11750 - $8620]	$3,130
			$3,130
April. 30	J. Nozomi, capital	$2,300
	J. Nozomi, withdrawal		$2,300

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Post-closing Trial Balance Debit Cash Prepaid Insurance Office Supplies Accounts Receivable Computer Equipment Accumulated deprn.-Equip. Salaries payable J. Nozomi, capital Total Credit $39.600 $2.550 $800 $1,750 $40.000 $500 $370 $83.830 $84,700 $84.700

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